BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
AB 2758 - Berg Hearing Date:
June 22, 2004 A
As Introduced: February 20, 2004 FISCAL B
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DESCRIPTION
Current law establishes it's the policy of the state to assure the
continued affordability and widespread availability of high
quality telecommunications service to all Californians.
Current law establishes the California High Cost Fund-A
Administrative Committee Fund (CHCF-A) and the California High
Cost Fund-B Administrative Committee Fund (CHCF-B). These funds,
which are funded by surcharges on telephone bills, subsidize the
cost of providing telephone service to high cost, mostly rural
areas. These programs sunset on January 1, 2005.
Current law establishes a grant program of up to $10 million
annually to subsidize the cost of providing telephone service to
areas where it doesn't currently exist. The money comes from the
CHCF-A or CHCF-B funds, as determined by the California Public
Utilities Commission (CPUC). This program sunsets on January 1,
2006.
This bill extends the sunset until January 1, 2008.
BACKGROUND
California has long embraced a policy of universal telephone
service. That policy has resulted in rate subsidies for
low-income and rural telephone users, as well as subsidies to
extend telephone wiring to people who aren't located near an
existing telephone plant. However, some communities are so far
away from an existing telephone plant that the cost of extending
telephone service to them will never be recouped, even with the
existing subsidies.
To compensate for that economic reality, AB 140 (Strom-Martin),
Chapter 903, Statutes of 2001, was enacted to create the grant
program extended by this bill. The program subsidizes the
facilities to serve those remote, unserved communities. A report
by the State Auditor estimated 112,000 people live in areas where
telephone service isn't offered. The program established by AB
140 provides service to communities which don't have service, in
contrast to the existing CHCF-A and CHCF-B programs, which
subsidize customers who already have service.
The grant program is needs based in that the median income of the
community to be served cannot exceed the level used in the
Universal Lifeline Telephone Service Index. Grant applicants must
also seek federal resources. Applications must have the support
of local government and law enforcement, as well as commitment
letters from 75% of the potential local customers. The program is
technology neutral in that any technology providing telephone
service, from wireline to wireless, may be used. Grants are
awarded by the CPUC.
COMMENTS
1.Program Turmoil Drives Desire To Extend Sunset Early . The
2001-02 budget crisis resulted in elimination of funding for
this program and a reallocation of staff resources in March
2002, but program funding was reinstated in the 2003-04 fiscal
year. Earlier this year, the CPUC staff conducted meetings in
Coachella, Independence, Lakeport, Susanville, and Eureka to let
interested parties know about this program. Grants were awarded
this month to programs in Humboldt, Trinity, and Placer counties
where citizens have never received telephone service. As these
are the first grant awards, the 2006 sunset date on the program
won't provide for an adequate amount of time to evaluate the
effectiveness of the program. By extending the sunset date for
two years, the author believes the program will be able to
establish a track record upon which any subsequent decision to
extend or eliminate the program can be made.
2.Related Legislation . SB 1276 (Bowen) changes the sunset dates
of the CHCF-A and the CHCF-B programs from January 1, 2005 to
January 1, 2009. Absent the continuation of the subsidy to pay
for these programs, there won't be any money available to pay
for the program extended by this bill. As such, the author and
committee may wish to consider making enactment of this measure
contingent on the enactment of SB 1276. Furthermore, the author
and committee may wish to consider changing the sunset date in
this bill from January 1, 2008, to January 1, 2009, to mirror
the sunset date in SB 1276.
SB 1276 was approved by the Senate earlier this year and is
pending before the Assembly Appropriations Committee.
3.Technically Speaking. Because this program is paid for out of
the CHCF-A and CHCF-B funds, it is referenced in Sections 275
and 276 of the Public Utilities Code. An extension of the
sunset date means that the section references must also be
updated.
PRIOR VOTES
Assembly Floor (78-0)
Assembly Appropriations Committee (21-0)
Assembly Utilities and Commerce Committee
(12-0)
POSITIONS
Sponsor:
Author
Support:
California State Rural Health Association
SBC
Oppose:
None on file
Randy Chinn
AB 2758 Analysis
Hearing Date: June 22, 2004